The purpose of this paper is to analyze an article which appeared in the 13 April 1992 issue of Business Week. The name of the article is "To Russia with Trepidation: The West Takes a Gamble," and it was written by Business Week reporters Rose Brady, Brian Bremner, Mike McNamee and Peter Galuszka. The article reports on the fact that the West has agreed on a "$24 billion loan-and-aid package" to help the former Soviet Union "as it gropes its way toward a market economy." It is also noted that Russia and some of the other former Soviet republics have become members of the International Monetary Fund (IMF). This agency will administer the aid to the republics, and will also provide advice and assistance in the development of future economic reforms.
The republics of the former Soviet Union are currently undergoing drastic political, social and economic changes. Now known as the Commonwealth of Independent States, these republics are seeking a shift from a Communist state-controlled economy to a free enterprise system. In fact, this economic shift is seen as being one of the most important aspects of all the current reforms. As noted in an earlier Business Week article, "the top priority of the commonwealth leaders is to push ahead with the difficult transition to a market economy." The shift to a market economy is indeed a very difficult transition. The Republic of Russia, for example, is currently suffering with a massive balance of payments deficit. This means that Russia's debits (outflow of funds) exceed its credits (inflow of funds). As Czinkota, Rivoli and Ronkainen point out, this is a situation which is highly unstable and cannot be sustained for a long period of time. The Business Week article by Brady, Bremner, McNamee and Galuszka claims that the former Soviet Union's transition to a market economy "could be disastrous without outside aid." This is why the proposed aid package from the Western nations is so im...